The Anti-BrickPicker Effect

[Mos_Eisley]

Let me first say that this is by no means a knock on this site. I enjoy this site and it provides a lot of great features you can't get anywhere else.

The sad news for me though is that the way the site has been taking off over the past year has actually had a big impact on me buying less sets for investment purposes. There are so many posts from people who are amassing substantial quantities of sets I would have easily invested in in the past. Now I know some people are just talk and don't really have what they say, but there are plenty who really do have what they claim. Not only are the huge collections concerning, but the vast amount of sets spread 1-5 at a time across multiple investors adds up quickly to an alarming amount of sets that will have to be unloaded after retirement before really significant gains can be realized.

I've said it before, but I think last year's retiring sets will be the last that see really big gains quickly. Yes, there will occasionally be a SE Crawler or The Zombies set that comes along, but those will generally be hard to predict (aside from Crawler situations). In the past, 2-3 years was a pretty standard time frame for a set to reach it's peak after retirement, but I foresee this becoming more like 5-7 with very gradual climbs after a possible initial small jump. With those kinds of holding periods, I just don't see it being as worthwhile anymore.

Obviously, there are many ways to make money at this. I've tried all sorts of ways, and I don't think the method I've settled on is viable going forward. Doing small, quick flips just isn't worth the time and effort for me. All the hoarding that's going on combined with the significantly longer shelf lives of sets is creating an environment where sets will have to be held for far too long to make the returns that make it worthwhile for me. I think the risk vs. reward is skewing in the wrong direction.

In the past, I have purchased at least 5-20 of every set I wanted for investment, and it was a lot of sets. When I see posts about buying dozens of this set and that, I cringe a little. Those posts actually make me buy less of a set than I normally would. In the past, I would have been all over something like The Orc Forge if I knew it was on its way out. I didn't buy a single additional set during all the hype for the set a month or two ago. Will I regret that? Possibly, but I doubt it.

I'm not saying that I'm done buying, collecting, or investing. I will always be a collector. But my days of buying large quantities of everything I want are definitely gone. For investment purposes I'll only be buying quality sets that I can get for at least 30% off, things like BTTF and SE Crawler aside.

[exciter1]

Do you have anything you want to sell, at cost?  I keed I keed...

[Ronda]

It happens all the time to a lot of things - first it's just a few investors who discover the potential and get a good profit, then more people realize they can do the same, and so on.  The amount of those who want to buy doesn't grow as quickly. 

 

Well, don't worry, I'm not your competitor-investor

[justafrog]

The cat has been out of the bag on Lego for awhile now (years, at least). There may be a current ramp up of investors, but I personally wouldn't worry just yet -- even if I were purely a full set investor.

 

There were a lot of casual and not-casual Lego investors (and all form of Lego resellers) out there before this site was created (hence, the need for and quick popularity of a site of this type). Now that they're gathered all together and finding mostly-sympathetic brethren, they're chatty and active. They have their own type of people to talk shop with, it's very natural.

 

Yes, there are some new ones - some like me, whose accumulation of new sets to hold is fairly minor; some fresh as paint with stacks of cash.

 

But notice the the crash and burn rate of the latter especially - a few months after the thrill of acquisition wears off (heck sometimes a few minutes...) and they're trying to sell everything hoping to get what they paid for it.

 

I'm not saying you're wrong, but I do think Lego investing is still, at this point in time, a sound option. Toys are popular with kids and grown-up kids and always have been, and Lego new-in-box is still the exception rather than the rule a year or three after EOL.

 

The "vast number" of hoarded sets may not be as vast as you think, and even those will experience what I anticipate as a high sell rate by bored or over-stretched investors before they become a concern on the long-term-investor's secondary market.

[Guest TabbyBoy]

While there's still millions of kids wanting Lego and new investors/collectors developing an interest all the time, I think we have little to worry about.  Lego is probably the World's most sought after toy and will be for a very long time yet.  Some people are just starting to get sick of computer games and I'm one of them.  At worst, we just have to wait that little bit longer for the big returns unless you're lucky enough to have a lot of 41999s.

[JoshTX]

Interesting story, and it accounts for a good part of the reason why Lego is just one aspect of my overall investing activity. I will admit though, that Lego is, as of late, the most enjoyable.

 

A tell-tale sign for me the other day was when I randomly came across a scrappers forum and you had guys on there that typically collect scrap metal, lead, and copper piping and the like suddenly talking about lego, saying they can get a certain dollar amount for bulk legos and it's more than they are making from scavenging and reselling metal. That was disturbing, because it meant to me that the cat was out of the bag big time in the respect that now you have not only a big influx of resellers on a site such as this, but you have the common man who cares nothing about lego suddenly buying it because he "knows" that there's money it. To me, that's always been one of the telltale signs that something may be getting too big, when non-collectors have a perception that it's worth money whenever they see it.

 

I'm not suggesting a bubble and by no means am I trying to restart that kind of conversation, but the scrapper thing is something to think about.

[jal4u2c]

Your last sentence says it all. I agree with a lot of what you said. I only buy sets that are clearanced or on sale for investment. I don't have a lot of disposable income to do otherwise. I think it comes down to knowing "which" sets to buy. The sets i do have are going to bring a nice return. Will i get rich off it? Nope. But i will have made enough to fund my collecting for quite a while. I do plan on buying a few sets that aren't clearance priced like the HH just to see how it turns out though. It reminds me of the old vintage Star Wars figures. Those sell for lots of money now. So when they brought back the figure line in '95, everybody was stashing away cases and cases of new figures thinking they could cash in later on. Didn't work that way. What made the original stuff so valuable in the first place is the fact that no one stashed cases away back then. They played with them mostly. So there was a demand for them and very low supply. Now, everything is made in HUGE quantities and since everyone thought the same way, hoarding them in their closet, there is no demand at all. The figures from '95 go for less than half of what they cost. Granted, LEGO has a limited shelf life. But if TLG decides to start re-releasing sets every other year or even making them available longer, like the Death Star, that will take it's toll on investing. The sets announced already for 2014 already show a LOT of repeats. Nearly every set has a battle droid. Woohoo. I'm soo thrilled. I believe it's going to come down to picking and choosing the right sets, otherwise it's possible you may be just wasting your time. I have seen TONS of LotR and Hobbit LEGO at clearance everywhere but i haven't bought any. Apparently, neither is anyone else because every store i've seen them at, the Star Wars and other brands are gone but that stuff continues to sit. Something to think about if you're buying tons of LotR or Hobbit for investment. 

[El Guapo]

Interesting story, and it accounts for a good part of the reason why Lego is just one aspect of my overall investing activity. I will admit though, that Lego is, as of late, the most enjoyable.

 

A tell-tale sign for me the other day was when I randomly came across a scrappers forum and you had guys on there that typically collect scrap metal, lead, and copper piping and the like suddenly talking about lego, saying they can get a certain dollar amount for bulk legos and it's more than they are making from scavenging and reselling metal. That was disturbing, because it meant to me that the cat was out of the bag big time in the respect that now you have not only a big influx of resellers on a site such as this, but you have the common man who cares nothing about lego suddenly buying it because he "knows" that there's money it. To me, that's always been one of the telltale signs that something may be getting too big, when non-collectors have a perception that it's worth money whenever they see it.

 

I'm not suggesting a bubble and by no means am I trying to restart that kind of conversation, but the scrapper thing is something to think about.

I collected the old Kenner Star Wars line in the 70's and 80's.  I still have most of my original collection...but on the first days of Ebay I would pick them up at garage sales and sell them for a pretty good profit.  After a few years of doing this it started to become common knowledge that people were doing this.  I would go to garage sales and people with no idea would be asking astronomical amounts.  $20 for a Luke that was about $8 on ebay.  "These are worth a lot of money" they would always say.  They had NO CLUE.  I'd nose around and pick up an Amanaman that they thought was just a random toy for $.50.  (He's worth about $80). 

 

My point is that some people jump on the bandwagon and don't bother to do the research.  They will lose. The smart investors (hopefully me and you) can still do well.  We just have to wade through the idiots.  Don't be surprised if you see someone that read the USA Today article selling a Prince of Persia lego set for $100 at a garage sale saying "These are worth a lot of money".  

[Mos_Eisley]

Good thoughts throughout the above posts. Just to be clear, I'm not predicting a bubble or suggesting everything will be worthless in the future, I'm just stating that for me, the risk is no longer worth the reward.

[emes]

The main issue that I see with this is that ability to buy something does not mean everyone has an equal ability to manage inventory, market items, sell items, and process orders. The buying part is really the easy part in all of this. In no way is this a level playing field, and it never will be because of incompetence, laziness, differing skill levels, etc...

 

This is not a slam on anyone specifically, but I would say that based on the listings we see and based on many of the things posted here in the forums and some of the blog articles that a large percentage of would-be investors are somewhat incompetent when it comes to effectively doing all of the activities required to operate profitably in a secondary market. This could be because they just haven't learned how to do it yet, or it could be that they just don't care.

 

As you mentioned quick-flipping, it often gets a bad rap here because people say the time involved isn't worth the return. This is at best short-sighted. While I have no definitive proof, this is evidence to me that the people attempting it haven't really thought through what they're doing. Whenever you have a process that is inconsistent or inefficient, results will be impacted. The only reason I can quick-flip things profitably is because we're following a very well-defined, predictable process that produces predictable results. For example, I don't print shipping labels the way many of you do, I use standard box sizes, I buy boxes in bulk at really low prices, I use automation to manage inventory and create listings, etc... People also have issues with how long it takes to list things, which is yet another indication that people are using ineffective or no automation techniques to speed all of this up. This results in low-quality listings that take people a ton of time to create.

 

Just wait until close to Christmas when we see people whining about hitting item and selling limits on eBay that they don't know exist, or all of the complaints we will see about negative feedback because they didn't take the time to properly package and ship things. You'll see some people drop out of the market after that.

[MartinP]

Good thoughts throughout the above posts. Just to be clear, I'm not predicting a bubble or suggesting everything will be worthless in the future, I'm just stating that for me, the risk is no longer worth the reward.

I agree with you. At one point, my investing will not be worth the time, money, and effort I put into it.

[El Guapo]

Your last sentence says it all. I agree with a lot of what you said. I only buy sets that are clearanced or on sale for investment. I don't have a lot of disposable income to do otherwise. I think it comes down to knowing "which" sets to buy. The sets i do have are going to bring a nice return. Will i get rich off it? Nope. But i will have made enough to fund my collecting for quite a while. I do plan on buying a few sets that aren't clearance priced like the HH just to see how it turns out though. It reminds me of the old vintage Star Wars figures. Those sell for lots of money now. So when they brought back the figure line in '95, everybody was stashing away cases and cases of new figures thinking they could cash in later on. Didn't work that way. What made the original stuff so valuable in the first place is the fact that no one stashed cases away back then. They played with them mostly. So there was a demand for them and very low supply. Now, everything is made in HUGE quantities and since everyone thought the same way, hoarding them in their closet, there is no demand at all. The figures from '95 go for less than half of what they cost. Granted, LEGO has a limited shelf life. But if TLG decides to start re-releasing sets every other year or even making them available longer, like the Death Star, that will take it's toll on investing. The sets announced already for 2014 already show a LOT of repeats. Nearly every set has a battle droid. Woohoo. I'm soo thrilled. I believe it's going to come down to picking and choosing the right sets, otherwise it's possible you may be just wasting your time. I have seen TONS of LotR and Hobbit LEGO at clearance everywhere but i haven't bought any. Apparently, neither is anyone else because every store i've seen them at, the Star Wars and other brands are gone but that stuff continues to sit. Something to think about if you're buying tons of LotR or Hobbit for investment. 

You posted this while I was typing...obviously I thought of the SW figures from the 80's too.  Yeah...those orange and green POTF figures are great deals on ebay now.  You can buy them in their packaging for a few dollars each. Ha ha....

 

Careful though, to use anecdotal evidence when you are talking about Lego sales though.  Cause my area (Southern California) is quite the opposite.  The LOTR and Hobbit sets sell quickly, while Star Wars seems to sit.  In defense of SW and to support your thinking somewhat, SW seems to have far fewer discounts. 

[DoNotInsertIntoMouth]

You have to remember too the effect this site has on people who were out of Lego. I wasn't really buying Lego - I have now spent almost as much money of Lego to begin with past investing. So there are positives to outweigh the negatives.

[El Guapo]

Good thoughts throughout the above posts. Just to be clear, I'm not predicting a bubble or suggesting everything will be worthless in the future, I'm just stating that for me, the risk is no longer worth the reward.

I know...your point was articulated well I think.  I am new to lego "investing"...but have sold lego for years on ebay (if that makes sense). Based on what I've read from you in the past you seem to be fairly experienced.  So I think my example applies well to you.  At first is was easy pickings...just walk up and say "how much for those old star wars toys...i used to love Chewbacca" get them for $5 for a box and sell them for $50 on ebay by the next weekend.  But slowly people started catching on, so I had to use my expertise to get the good deals and make money...it was definitely trickier and more time consuming.

[nolanfan34]

I think Emes post is spot on. I agree with the OP that the amount of hoarding on here is concerning, but I also agree that most people will not take the time or effort to strategically plan their selling (I include myself in that category for now, although I am putting the work in to learn more).

 

I also think that a lot of people on here - and I am not knocking anyone - won't have the patience to see the returns either. I laugh at the posts on here where someone is complaining about the performance of a set like Weathertop that is barely retired and that you can still find at retail. The Zombies gave a lot of people the wrong expectation I think...

 

Good discussion though....

[El Guapo]

The main issue that I see with this is that ability to buy something does not mean everyone has an equal ability to manage inventory, market items, sell items, and process orders. The buying part is really the easy part in all of this. In no way is this a level playing field, and it never will be because of incompetence, laziness, differing skill levels, etc...

 

This is not a slam on anyone specifically, but I would say that based on the listings we see and based on many of the things posted here in the forums and some of the blog articles that a large percentage of would-be investors are somewhat incompetent when it comes to effectively doing all of the activities required to operate profitably in a secondary market. This could be because they just haven't learned how to do it yet, or it could be that they just don't care.

 

As you mentioned quick-flipping, it often gets a bad rap here because people say the time involved isn't worth the return. This is at best short-sighted. While I have no definitive proof, this is evidence to me that the people attempting it haven't really thought through what they're doing. Whenever you have a process that is inconsistent or inefficient, results will be impacted. The only reason I can quick-flip things profitably is because we're following a very well-defined, predictable process that produces predictable results. For example, I don't print shipping labels the way many of you do, I use standard box sizes, I buy boxes in bulk at really low prices, I use automation to manage inventory and create listings, etc... People also have issues with how long it takes to list things, which is yet another indication that people are using ineffective or no automation techniques to speed all of this up. This results in low-quality listings that take people a ton of time to create.

 

Just wait until close to Christmas when we see people whining about hitting item and selling limits on eBay that they don't know exist, or all of the complaints we will see about negative feedback because they didn't take the time to properly package and ship things. You'll see some people drop out of the market after that.

Couldn't agree more.  Selling on Ebay isn't as easy as people think.  You definitley need a system in place to sell effectively...The bottom line is you better enjoy it, cause it IS work and can sometimes be a PITA.  I just had a buyer open up a case cause he didn't get his item in a week....and another cause he claims the item was never received (tracking # says differently).  There are pitfalls everywhere on Ebay.

 

I am guessing, though, that some of the people with huge quantities will use Amazon or a fulfillment center, so they will pay higher fees but won't have all the headaches.  Anyone that is ammassing a ton of sets have any plans on doing this?

[Mos_Eisley]

I've always sold my sets myself and will continue to do so.  I just can't bring myself to send tens of thousands of dollars worth of old sets to Amazon's warehouse.  They are immaculate now, I can't imagine they would arrive to the buyer in that same condition if I don't send it myself.  Selling on ebay is a ton of work, but I enjoy it.  Shopping for sets, listing and packaging them up has always been fun to me.  I will continue to sell on ebay and Amazon (about to start there), but it will not be quick-flip sets and things of that nature.  

[kerrmando]

Mos_Eisley, couldn't agree more =/

[sadowsk1]

Finally, a bubble thread.  I was hoping another one of these develop.  I will enjoy the ride.

[lowillsw]

Agree...the market is getting bigger however 10% of all the dollar spend on toys is going to Lego.  That number is staggering.  The bid and ask spread is getting tighter as the secondary market become more efficent with price discovery.  Like you said, you will invest still in good sets at 30% off.  You just have to be prudent in your selection instead of just throwing at the dartboard blindfolded and hit bulleyes everytime like all the old timers used to.  There's a peak?  Perhap!  But remember this great quote by Chuck Prince "As long as the music is playing, you've got to get up and dance." 

[nolanfan34]

I've always sold my sets myself and will continue to do so.  I just can't bring myself to send tens of thousands of dollars worth of old sets to Amazon's warehouse.  They are immaculate now, I can't imagine they would arrive to the buyer in that same condition if I don't send it myself.  Selling on ebay is a ton of work, but I enjoy it.  Shopping for sets, listing and packaging them up has always been fun to me.  I will continue to sell on ebay and Amazon (about to start there), but it will not be quick-flip sets and things of that nature.  

 

I agree with this as well. I am doing mostly fixed-price listings, but some of the smaller lots I have been selling via auction, because I just like to see people bid on things. Even for a $10 auction I still enjoy seeing last minute bids come in.

 

In related news, my wife thinks I'm a huge dork at the moment.

[Darth_Raichu]

I think Emes post is spot on. I agree with the OP that the amount of hoarding on here is concerning, but I also agree that most people will not take the time or effort to strategically plan their selling (I include myself in that category for now, although I am putting the work in to learn more).

 

I also think that a lot of people on here - and I am not knocking anyone - won't have the patience to see the returns either. I laugh at the posts on here where someone is complaining about the performance of a set like Weathertop that is barely retired and that you can still find at retail. The Zombies gave a lot of people the wrong expectation I think...

 

Good discussion though....

Nor the patience to deal with the average PITA customers

 

I see Mos_Eisley's point.  The increased competition from other resellers (yes investors, you become resellers when you sell your stashed away sets) as well as from LEGO (longer shelf life) is shaping for new and less profitable marketplace. 

It is entirely up to the individual reseller to adapt to this or to step aside.

[Mos_Eisley]

Finally, a bubble thread.  I was hoping another one of these develop.  I will enjoy the ride.

This isn't a bubble thread, I think I've been pretty clear about that.  For me, this site has had an impact on my purchasing, just not in the same direction it has for many others.  I still have a ton of stuff to sell and will continue to buy things to sell in the future, just not following the buying habits of the majority.  When I see posts about loading up on this or that, I will be running in the other direction.  

[leaningjowler]

The best for me is when people sell lots on craigslist look up the price here and want that amount for their set. Usually its incomplete no box no instructions and they don't account for the eBay fees if they sold their item online but they want that Brickpicker price.....

 

Love the site but its not all gravy... 

[emes]

This isn't a bubble thread, I think I've been pretty clear about that.  For me, this site has had an impact on my purchasing, just not in the same direction it has for many others.  I still have a ton of stuff to sell and will continue to buy things to sell in the future, just not following the buying habits of the majority.  When I see posts about loading up on this or that, I will be running in the other direction.  

 

Yep, agree...it was pretty clear from your post that this is a the-landscape-is-changing-because-of-the-nature-of-competition thread.

 

I took your post as saying the equivalent of "lots of people have bad kids because they're bad parents, therefore I'm not going to have kids." The reality is, anyone can have a child, that's the easy part, but not just anyone can effectively rear a child.

 

Other issues I see:...Most people don't seem to have a target return in mind. Rather, they think in terms of a time-frame, rather than a return they're going to receive and selling when they can get that return. Many here see holding something for a certain length of time as some kind of weird badge of honor. In fact, the best investor here is whomever gets their target return in the shortest period of time. Often when people here do have a target return in mind, their target return is extremely unrealistic.

 

Also, I think there is a large percentage of the population here that ascribes some kind of nobility to the term "investor", when in fact they are really just hard core LEGO fans that are using the "investor" angle as a way to justify why they are a 20, 30, or 40 year old dude that plays with LEGO.

 

Honestly, all of this describes exactly the kind of competition you want in a market such as this.